The Kaiser Family Foundation just released on Friday their analysis of the prevalence of zero premium plan availability on the ACA marketplaces:
Where are “free” ($0 premiums) bronze #AffordableCareAct marketplace plans available for 2021?
2600+ counties for a 40 y/o with an income of $20K
500+ counties for a person of the same age making $30k/yr
See our new analysis and maps: https://t.co/2HgxpXQzE0 #OpenEnrollment pic.twitter.com/ZyOJXhkskx
— KFF (Kaiser Family Foundation) (@KFF) November 13, 2020
Why are there fewer counties with zero premium bronze plans? Is it sabotage? Is it nefarious?
Competition increases net premiums for subsidized individuals who purchase plans that are priced below benchmark.
The ACA uses a price linked subsidy system where the subsidy is a gap filler between an individual’s expected contribution which is a function of income as measured by the household federal poverty level and the benchmark plan. The benchmark plan is the second least expensive silver plan. When there is no competition, a monopolist, or at least a quasi-competent monopolist, will jack up their benchmark as high as possible and then flood the zone with a single cheap silver and their normally priced bronze plans. This produces a lot of zero premium exposure. When there is competition and multiple insurers are trying to compete on price, there is a race to minimize premium spreads between the cheapest silver and the benchmark which drives the benchmark down. A lower benchmark level means premium spreads are compressed. This spread compression increases net premiums for subsidized buyers.
Before silverloading, zero premium plans were rare for single and young individuals earning over 150% FPL. With silverloading, silver premiums have spiked relative to Bronze, so zero premium plans will be more common at any point from 2018 to present and the future compared to 2014-2017. However, as insurers return to markets that they fled in 2018 due to policy and actuarial uncertainty and insurers expand into new, monopolistic markets, zero premium plans will become rarer.
OT, but Moderna results are out, also more than 90% effective. Fauci is ecstatic. Big deal.
Maybe the greatest benefit of a government plan that automatically registers and benefits everyone is that we don’t have to bend our minds around the intricacies of counterintuitive insurance
ETA: Thankful that you do it for us, David
@Cheryl Rofer: What you are talking about is the fact that the incentives of private insurance are 100% perverse. The ACA does not fundamentally mitigate that fact — the major mitigation, such as it is and always has been, is state-level regulation.
@Cheryl Rofer: Or pick your insurance based on how sick you think you’ll be in the upcoming year. Or if you’re planning on having a kid, I guess.
So what’s the solution for dealing with monopolistic markets within the framework of the ACA? Public option, sure, but is there anything else? Paying insurers to expand into additional markets seems ripe for abuse.
@Frank Wilhoit: I thought Cheryl was thinking more along the lines of something-for-all, but I could be wrong.
@WaterGirl: I interpreted that as when you’re a federal employee if you don’t make any changes you pretty much stay on the plan you’re on. Could also be interpreted as ACA keeps your enrollment regardless of if you switch or stay passive. I’ll let her clarify as I am just waking up and coffee has yet to be consumed.
The key phrase for me was “automatically registers and benefits everyone”. But Cheryl can surely explain if she wishes. We may both be wrong. :-)